There’s nothing more awkward than having to evict a tenant, but at some point, you’ll eventually encounter scenarios like unpaid rent or a breach of lease terms. When this happens, it can be incredibly daunting and stressful. Common questions include: will I face legal ramifications? How do I begin the eviction process properly? What are my rights and responsibilities as a landlord? Fortunately, The Rent Shop has you covered with our complete guide to handling rent arrears and evictions legally in New Zealand.
Understanding Rent Arrears
If you’re a new landlord, the term "arrears" might sound a bit unfamiliar. Basically, it’s a polite way of saying a tenant owes rent - as soon as that rent payment is late, it’s officially in arrears. While late payment can be a bit of a headache, it’s important to approach the situation with a touch of compassion.
Life happens! From losing a job to unexpected expenses or just plain forgetting, there are plenty of reasons a tenant might miss a payment. That’s why your first step should always be communication. Reach out with a friendly reminder about the amount they owe and chat about when you can expect the payment. The ideal outcome here is some sort of agreement for example; you might distribute the debt across their future payments until it’s all paid off.
Legal Framework in NZ
What happens when you can’t find an agreement? That’s where the law comes into play. Tenancies are governed by the Residential Tenancies Act. This act lays out clear expectations and solutions for any issues that arise, ensuring both landlords and tenants know their rights and responsibilities
Landlord Responsibilites
As a landlord, you have a few key duties to keep in mind:
- Ensure the property is in a reasonable condition.
- Allow the tenant to enjoy the property without unnecessary disturbances.
- Meet all relevant building, health, and safety standards.
- Handle any abandoned goods appropriately.
- Inform the tenant if the property is put up for sale.
- Appoint an agent if you're out of New Zealand for more than 21 days.
Tenant Responsbilites
Tenants also have their share of responsibilities when renting a property:
- Pay rent on time.
- Keep the property reasonably clean and tidy.
- Notify the landlord promptly about any necessary repairs.
- Cover their own utility costs like electricity, gas, and internet.
- Use the property primarily for residential purposes, not business activities.
- Leave the property clean, tidy, and free of rubbish and personal belongings.
- Return all keys to the landlord when moving out.
- Leave behind any items provided with the tenancy.
While you should be meeting all your responsibilities as a landlord, remember that delays in repairs are not an excuse for tenants to stop paying rent. Additionally, if you have multiple tenants and one doesn’t pay, the others can't ignore this—they’re all jointly responsible.
Handling Rent Arrears
Now that you know what’s expected of both you and your tenants, you can take three proactive steps to address unresolved rent arrears:
- Send a Formal Notice: Start by sending a 14-day notice to remedy, inform the tenant of the overdue rent and give them a clear timeframe to pay up. This sets the stage for official communication and records of the issue.
- Negotiate Payment Plans: Open another dialogue with your tenant and consider negotiating a payment plan that suits both parties. While this may be frustrating, especially if you’ve already discussed the issue with them, an amicable agreement is a lot smoother than going to the tribunal.
- Keep A Detailed Record: Maintain meticulous records of all communications and attempts to resolve the issue. Document every phone call, email, and meeting. This will be invaluable if the situation escalates and you need to take further action.
Legal Eviction Process
Sometimes, despite your best efforts, eviction becomes the only viable option. If you've sent a 14-day notice to remedy and the tenant still hasn’t paid by the end of those 14 days, you have grounds for eviction. But let’s be honest, dealing with late payments repeatedly can be a major hassle. That’s why the Tenancy Act has provisions for handling repeat offenders with three key qualifications:
- The rent has remained unpaid for at least five working days on three separate occasions within a 90-day period.
- Each time, you’ve given the tenant a comprehensive written notice about the unpaid rent.
- After the third notice, you can file an application to the Tenancy Tribunal provided you do so within 28 days.
If the timeline seems a bit confusing, don't worry! The government’s tenancy website offers a few examples to help you understand what an assessment for repeated rent arrears might look like.
A Step-by-Step Guide to the Eviction Process
Once you have grounds for eviction, the process is fairly straightforward:
- Apply to the Tenancy Tribunal: As a landlord, you can’t personally evict a tenant, so you must apply to the Tenancy Tribunal for an official order.
- Attend a Tenancy Tribunal Hearing: Be ready to attend the Tenancy Tribunal hearing, where you'll present your case with all the documentation and evidence you’ve gathered. This is where your detailed records will be invaluable.
- Enforce a Tenancy Tribunal Order: If the Tribunal rules in your favour, they will issue an order that can be enforced if the tenant still doesn’t comply. This might involve seeking assistance from the District Court to carry out the eviction.
Tips to Prevent Rent Arrears
- Thorough Tenant Screening: Conduct comprehensive background checks on potential tenants. This includes proof of income, employment verification, and references from previous landlords to ensure they have a reliable rental history.
- Clear Payment Expectations: Clearly communicate payment expectations from the start. Provide detailed information on rent due dates, payment methods, and consequences of late payments in the lease agreement.
- Regular Check-Ins: Schedule regular check-ins with your tenants to discuss any issues they might be facing.
- Automated Reminders: Implement automated rent reminders to help tenants remember upcoming payment due dates. This simple step can significantly reduce the likelihood of late payments.
Case Studies
Curious to see the eviction process in practice? Here are three cases revolving around rent arrears and their outcome in court. Observing how others have navigated similar situations can give you a clearer picture of what might happen if, worst-case scenario, things escalate.
Kia Ora Village v Belcher (2016)
In this notable case, Kia Ora Village faced ongoing rent arrears with a tenant, Belcher. Despite multiple reminders and attempts to resolve the issue, the tenant continued to fall behind on payments. The court ultimately sided with Kia Ora Village, highlighting the legitimate grounds for eviction based on rent arrears.
Barker v Henderson (2019)
The case of Barker v Henderson serves as a cautionary tale for landlords. In this instance, Barker issued an eviction notice to Henderson, but the notice was not properly executed. As a result, the court deemed the eviction invalid. This is a stark reminder that even minor procedural missteps can render an eviction attempt null.
LJ Hooker v Smith (2017)
The dispute between LJ Hooker and Smith showcases the effectiveness of the Tenancy Tribunal's mediation process. Rather than escalating the issue to a costly and time-consuming court battle, the Tribunal facilitated a resolution that satisfied both parties. This case demonstrates the Tribunal's role in mediating disputes efficiently, providing a valuable resource for landlords to resolve conflicts amicably.
Conclusion
While this guide provides you with all the tools you need to handle rent arrears and evictions legally, the best approach is to avoid these situations altogether. That’s where we come in. At The Rent Shop, we specialise in comprehensive property management, from our rigorous tenant screening process to our dedicated credit controllers who promptly address rent arrears. We ensure missed or late payments are followed up with maximum efficiency. Want to take the stress out of managing your rental property? Contact us today and let us handle the hard work for you!
